2 Unsung Heroes of Big Tech's $725 Billion AI Capex Spend

The artificial intelligence (AI) infrastructure market is booming, with big tech companies set to spend around $725 billion on capital expenditures (capex) this year alone. To put that in perspective, that is more than the gross domestic product (GDP) of all but 22 countries in 2025.

While AI infrastructure stocks have performed well, I think two stocks that have generally been underappreciated during this boom have been Broadcom (NASDAQ: AVGO) and Taiwan Semiconductor Manufacturing (NYSE: TSM). Let's take a closer look at these two unsung AI stocks and why they look like buys.

Broadcom: An ASIC and networking leader

As spending on AI chips ramps to extraordinary levels, hyperscalers (owners of large data centers) have been increasingly looking for ways to save on costs. One of the best ways to do this is to turn to custom chips called application-specific integrated circuits (ASICs). These are chips that are hardwired to handle specific tasks. Because they are sole-purpose chips, they tend to handle the tasks for which they were developed well, while also being more energy efficient. This is particularly ideal for AI inference, which is an ongoing cost.

One of the first companies to hop on the ASIC train was Alphabet, which, with the help of Broadcom, developed its tensor processing units (TPUs) more than a decade ago. Alphabet has long used these chips to power its internal workloads, but as AI exploded, it gave the company a huge cost advantage, as it used its chips to train its Gemini AI model and run inference. With Alphabet being one of the biggest AI data center spenders, Broadcom continues to reap the rewards of being Alphabet's co-developer partner.

Meanwhile, Broadcom added another revenue stream when Alphabet began letting a few select customers directly order TPUs from it, including a $21 billion order from Anthropic to be delivered this year. The three companies have also extended their partnership for future years and TPU iterations. At the same time, the success of TPUs has led to other hyperscalers working with Broadcom to develop their own custom chips. The company claims this will be a well-over $100 billion business in fiscal 2027.

Not to be overlooked, Broadcom is also a leader in data center networking and optical connectivity. Its Ethernet solutions are pivotal in the transfer of data, while it's also at the forefront of co-packaged optics (CPO). By combining optical and electronic components within the same package, CPOs can slash interconnect energy consumption by up to 65% compared to traditional pluggable optics. This business also ties directly into its ASIC business, as customers using its proprietary ASICs need its networking technology to link their chips together.

With Broadcom riding two powerful AI infrastructure trends, ASICs and next-gen optical components, the stock is a buy.

Image source: Getty Images.

Taiwan Semiconductor Manufacturing: The chip manufacturing king

One of the unheralded stocks of the AI boom is Taiwan Semiconductor Manufacturing, or TSMC for short. While it was recently reported that Alphabet and Nvidia were considering using Intel as a backup chip manufacturer, TSMC still holds a virtual monopoly on the making of advanced logic chips.

At this time, TSMC is the only foundry that has proven it has the expertise to make advanced chips at small node sizes (a measure of chip density) at scale with high yields (few defects). This has made it an indispensable part of the semiconductor value chain and given it strong pricing power. The company is also working with its customers to aggressively expand its capacity to meet rising demand for chips.

With TSMC benefiting from the AI infrastructure boom and poised to be a winner no matter which chip technologies gain share, this is a stock you want to buy and hold for the long term.

Geoffrey Seiler has positions in Alphabet and Broadcom. The Motley Fool has positions in and recommends Alphabet, Broadcom, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.